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featureThe challenges facing contractors to achievehigher levels of mechanisation: The NewZealand experienceJohn ShriderAbstractContracting of felling, extraction, transportation and road construction and maintenance activities associated with forestharvesting and involving the use of heavy equipment has been a feature of the forest industry in New Zealand since the 1960’s.The relationship between contractor and forest company however has changed considerably since those early days as has thenature of contract structure and the environment in which forest owner companies and contractors have been required tooperate. Harvesting methods and systems have progressed from basic motor manual systems with emphasis on the manualto more mechanized systems with emphasis on sophisticated technology and high investment cost. The transition howeverhas largely been reactive, very difficult and the barriers to completing that transition still loom very large.IntroductionChallenges facing the forestry sector and heavyequipment contractors in particular in moving to higherlevels of mechanisation loom large and must be facedurgently if the sector is to benefit from the utilisation oflarge new areas of forests established over the past 15 years.By looking at our recent history we are able to highlightsome of the more important and significant events andinfluences that have contributed to the position we nowfind ourselves in.The most significant and common factor through thepast 40 years of developing mechanization has been thatcommon denominator, change. Dynamic influences inthe macro-economic and social environment have almostguaranteed that any response to these influences havebeen reactive.Developments in mechanisation, which by definitiontoday means technology, require a two pronged approach.The first is the development of the tool or piece ofequipment required to undertake the task and the secondis the assessment and performance of the tool and theimpact of any improvement in the context of its placein the harvesting system. The first requires a hands onapproach to engineering and experimentation through trialand error, often unplanned or coordinated until the ideais sufficiently advanced to bring in the heavy artillery torefine and professionally design the commercial product.The second requires the industrial engineering approachto work methods, work measurement and system designand work balancing that investigates and improves theharvesting system. In New Zealand we have been very goodat the former but inconsistent with the latter.The reactive approach works well with the design ofthe tool to do the job as the trial and error process proceedsbut the increased and more sophisticated requirementsof system design and implementation requires a vastlydifferent set of skills and greater commitment to well fundedand managed research and development programs.Brief History of Mechanisation DevelopmentsTo fully understand the constraints that contractorsface today with mechanisation we should just take aminute to summarise the development and progress ofmechanisation in New Zealand over the past 40 years.The end of the New Zealand Forest Service eracoincided with the start of the transition from negotiatedlarge volume stumpage sales by the State to smaller volumelog sales with a much wider customer base. This alsosignaled a move from run of bush product lines includinga large pulpwood component to more customer specifiedlog types.Generally most harvesting crews prior to the 1970’swere configured with one or two tractor and arch or staticyarder prime mover, plus large excavator based rope andgrapple loaders.The introduction of contractors in the 1970’srepresented the first large scale advancement in moremobile extraction systems although still largely withinmotor-manual systems. Machines such as skidders,including grapple skidders, and rubber tyred loadersfocused on high production in large wood became the normon the central plateau. Production thinnings operationswere also a big component for the supply of pulpwood tothe major pulp mills and a variety of motor manual systemswere tried with varying degrees of success.The 1970’s also saw the introduction of the early fellerbunchers for large scale post and pole operations, albeit inmuch smaller wood but ideally suited for mechanisationpotential. The late 1970’s saw the introduction of thefirst harvester and shortly after the incubation of thatNew Zealand icon, Waratah. Waratah has been aninteresting story in that following the initial enthusiasmfor mechanization in the 1970’s there was very little localprogress. In fact the development of the Waratah delimberfeller buncher (DFB) and the first of the felling headsoccurred in Australia and it wasn’t until the late 1980’sNZ JOURNAL OF FORESTRY, AUGUST 2007

featurethat interest once again picked up in New Zealand withlarge scale mechanized operations in Northland withthe Waratah grapple processor. The Waratah HydraulicTree Harvester (HTH) was developed in the late 1980’sbut unfortunately the industry in New Zealand was nonsupportive. The owner of Waratah at that time, DaveCochrane , in summing up an address at a NZLIRAseminar concluded:1. “To logging managers who are looking at an increasingwood availability and a labour force that isn’t: Look atmechanisation. Support your logging contractors: Makebetter use of the excellent general engineering facilitiesthat we have in New Zealand. We can manufacture thelow cost attachments that you need.2. Secondly, to other machinery developers: If you areconsidering applying for Government funding formachinery development don’t bother! You will probablyspend more time and effort in the application and inthe subsequent reviews and audits than you receive inthe value of the grant. Also, if you are fortunate enoughto get the support of the local forest industry, you needGovernment funding anyway!3. But, if you still persist in spending four to six hundredthousand on machine development and are consideringlocal manufacture…….reconsider! I certainly wouldn’trecommend machinery manufacture in New Zealand toanyone! Take it to a country where your work will beappreciated…..Canada, U.S.A., Australia.”Dave Cochrane 1 probably didn’t realise it at the timebut how prophetic his words were. Waratah of course isnow an overseas owned company and the industry forumwhere he uttered those words is no longer available forparticipants in the forest harvesting industry to gatherand share and trade ideas. NZ LIRA, or more accuratelyits successor, NZ LIRO, was disbanded in 2000.The rate of mechanisation through the 1990’s hasbeen largely dependent on and reactive to the changingenvironment rather than a deliberate industry strategy tomechanize. Changing topography as a greater percentageof harvesting is undertaken on steeper slopes withless stable soil structure, boom/bust harvesting cyclesparticularly through the price spike and subsequentAsia Crisis, changing labour markets, and of course thechanging ownership structure have all contributed tothe New Zealand experience. The development of theWaratah range of equipment however has now evolvedto a stage where there are significant numbers of fellingand processor heads in operation and their applicationhas become the machine of choice for many contractorsas they have been steadily adapted for the larger branchedtree that we grow in New Zealand.1Managing Director, Waratah Engineering LimitedThe challenges to mechanisation today and leadingtowards the second decade of the 21st century have theirgenesis created by instability in the operating environmentof the past 20 years in particular.I have identified several factors that I believe haveconstrained a more strategic and measured approach tohigher levels of mechanisation and I will expand on these.They are presented in no particular order.1. Insecurity Caused by Dynamic Changes inForest OwnershipPerhaps the one most influential factor constrainingcontractor uptake of mechanisation has been the instabilitycaused by changes in forest ownership (Fig 1). This isparticularly true for the past 20 years. In order to understandthe scale of that change we should review the recent historyof forest ownership. This can be separated into 4 distincteras many of which were heavily influenced by other macroeconomicfactors of the time, some of which I have identifiedas being influential during the relevant era.Figure 1Source: MAF, NEFD A National Exotic Forest Description 2005To retain some scale and relevance to the majority offoresters I have just focused on the past 40 years. This isalso a suitable timescale when reviewing the mechanisationof harvesting operations in New Zealand.The Forest Service Era - 1965 - 1987Forest ownership from the mid 1960’s into themid 1980’s was dominated by the Government with itsdepartment, the NZ Forest Service in control of over 60%of the production resource.The majority of the remainder of the mature resourcewas in the hands of 2 major integrated forest companies,Fletcher Challenge Forests Ltd formed in 1981 whenTasman Pulp & Paper Company was incorporated intothe enlarged Fletcher Challenge corporate structure andCarter Holt Harvey formed in 1985 from an amalgam ofCarter Holt and Alex Harvey Industries and later to includeNZ Forest Products Ltd. Both Fletcher Challenge ForestsNZ JOURNAL OF FORESTRY, AUGUST 2007

featureand Carter Holt Harvey emerged from a frenzied periodof acquisitions, takeovers and share market plays in thelate 1970’s and early 1980’s that also coincided with theemergence of contractor harvesting crews and of course thedemise of company crews.This scaling back of company operations continued until1987 when the last of the company crews were disbanded. Thiswas a significant milestone in the history of forest ownershipas it was also the year when the NZ Forest Service ceased toexist as a Government Department and became the ForestryCorporation, a State Owned Enterprise operating under aBoard of Directors and vested with the task of managing theplantation estate on a 100% commercial basis.In summary the features of this era could be categorisedas follows:• The demise of company owned and managed crews.• Predominantly motor manual systems.• Harvesting on favorable terrain.• Introduction and establishment of mobile highproduction crews.• Stable labour markets, stable owner operated contractorforce with 5 year contracts.• No pressure to mechanize as the product was run of bushwith high pulpwood component.• Some introduction of labour saving equipment e.g.,grapple skidders, tracked skidders• Largely uncapped contract volumes that allowedcontractors to over produce and by doing so, reduce thefixed component of their per m3 harvesting costs.The Successful Publicly Listed Corporate & Log PriceSpike 1987 - 1995Two significant forest asset sales rounds followed in1990 and again in 1996 when the Crown assets vested inthe Forestry Corporation were sold to a number of privateand publicly listed companies including Fletcher ChallengeForests Ltd and Carter Holt Harvey Forests. The first half ofthe 1990’s represented a period of boom with record exportprices in 1993 - 1995 leading to unprecedented harvestingactivity and a rich business environment for contractors.It also signaled the exit of a number of experienced andsuccessful contractors who moved on to other vocations.At the same time the number of forests maturing in areasoutside of the central North Island began to come on streamand presenting a whole new set of challenges to harvestingmanagers and contractors.Features of this era included:• The industry was dominated by 2 major integrated forestcompanies.• Wider customer base with exacting quality standardstherefore requiring significant increases in levels of inbushmerchandising.• Buoyant export markets.• Exit of established contractors with high equity levelsin their businesses.• Emergence of younger contractors with more debt.• Requirement for specialist yarders for more difficultterrain.• Still a generally stable labour market but pressure ontraining particularly with requirement for log making.• Still largely uncapped contract volumes but pressure oncosts starting to bite due to additional log making andquality standards.• Demise of secure longer term contracts.• Introduction of high production crews and quantumleap in mechanisation largely through the introductionof processing heads.The Tightening Profit Margins of the Corporates &the Asian Crisis 1995 - 2000The latter half of the 1990’s, and in particularthe Asian Crisis that struck in 1997 signaled troublefor the sector that led to tight bottom line businessmanagement practices. These times proved very difficultfor contractors and one of the company responses wasto enter into “key supplier” contracts where effectivelya small number of key suppliers managed much of thehigh volume harvest programs. The key suppliers inturn hired smaller sub-contractor crews to undertakethe work. The theory of “key supplier” was that many ofthe costs incurred by the forest companies in managingthe harvesting operations could be passed to the keysuppliers. Unfortunately the full intent was never realiseddue to increasing costs of regulation e.g., ResourceManagement Act 1990 and tightening health and safetylegislation that spread responsibility equally amongstindividuals, contractors and companies. Pressure onprices from the Asian Crisis fallout also led to a squeezeon profits for contractors.This era signaled:The collapse of the export market.• Creation of super entrepreneurial key suppliers but lossof contact by these key decision makers with the bushface.• Tougher regulatory pressure particularly with regard toworker safety requirements.• Arms length contact with contractors by forest companiesand wider span of control.• Capping of production volumes thus diminishedopportunities to maximize efficiency.• Exit of smaller contractors, many with high levels ofdebt, who did not have contracts.• Appearance of company willingness to switch on andswitch off contractors almost at whim.• Significant drop in investment in research, includingharvesting research and the demise of NZLIRO, andNZ JOURNAL OF FORESTRY, AUGUST 2007

featureother industry good funded initiatives.The Disappearing Corporates and the Appearance of theTIMOs 2000 - 2006The last 5-6 years has seen further and very significantchanges in forest ownership with the US pension fundTIMOs acquiring significant tracts of plantation forest exthe sale of Fletcher Challenge Forests and more recentlythe sale of Carter Holt Harvey Forests.TIMOs have the belief that they can maximize returnsfrom the asset through 3rd party ownership (Hagler2006). This is done by unlinking the industrial forestsfrom manufacturing operations and therefore providingflexibility to the timber owner that can improve returns.This means that under TIMO ownership management isdynamic which is perhaps not conducive under currentcontract structures to security of tenure for contractors.TIMOs also thoroughly assess and ensure thatinvestment decisions have quick payback and as in thepreceding 1995 - 2000 era there is less enthusiasm to becomeactively engaged in industry wide initiatives although recentsignals are that this may be changing.The high $NZ/$US exchange rate has also meantthat the export markets for wood products have remaineddepressed however a booming domestic economy has fuelledrecord harvest volumes which have led to claims of overcuttingby the cash hungry TIMOs. Until recently however,prices for logs have remained depressed while costs incurredin getting them to the customer have steadily increased.The environment for contractors has not improved withlack of security of contract tenure and very tight, if any,profit margins.Characteristics of this phase of forest ownership in NewZealand include:• The demise of the last of the large integratedcorporates.• Influence of the TIMOs who must be quick on their feetto maximize opportunities that meet their obligations tothe pension funds.• Entrenchment of arms length company/contractorrelationships.• Greater reticence by new or previously damagedcontractors to enter into harvesting contracts.• Emergence of forest management companies who arecontracted to the TIMOs and who in turn enter intorelationships with contractors.2. Limited Availability of Reliable StrategicInformation - New Resource and Harvest RateUncertaintyNew Zealand has seen a steep increase of approximately35% in harvest volume from 1999 to 2003 (Fig 2) and to someextent this was predictable if we look at the new plantingrates (Fig 3) which showed a sustained year on year increasein new planting from 1973 through to 1985. The key factorhowever is that a large proportion of this new planting was inmore difficult terrain where opportunities for rapid changemechanisation are constrained. The rate of mechanisationhas quite possibly slowed in the late 1990’s early 2000’s dueto the requirement for cable system development to simplyrecover the logs from the steeper topography but also to caterfor more stringent environmental codes of practice.Figure 2Source: MAF, NEFD A National Exotic Forest Description 2005Figure 3Source: MAF, NEFD A National Exotic Forest Description 2005We can also look at historic wood supply forecasts andcompare these to actual roundwood removals for periods oftime. Take the period 1995 - 2005 (Fig 4) where the actualharvested volume in 2005 was lower than all base, positiveand negative cut scenarios proposed in 1993 (Ministry offorestry 1993). The primary assumptions for each of thesescenarios were:Base CutEarly CutLate CutTarget clear fell age for radiata pine - 30 yearsTarget clear fell age for radiata pine - 25 yearsTarget clear fell age for radiata pine - 35 years.What the data doesn’t tell us is of the strong anecdotalevidence that harvest age in New Zealand has reducedconsiderably over the 1999 - 2003 period, possibly as lowas 23-24 years old which would suggest that we should lookat the early cut scenario as the one that should have beenNZ JOURNAL OF FORESTRY, AUGUST 2007

featurebest fit for our actual cut. The graph would tend to suggesta different story and while the intent is not to be critical offorecasts it does reinforce the notion that it is notoriouslydifficult to use this information for strategic planning foradditional resources (contractors) or the types of systems(mechanisation) that they may employ.Just to confound things further the following extractprovides a summary of the last 2 years roundwoodremovals:“Forestry production (roundwood removals) slumped inthe year ended March 2005 and rose slightly in 2006. Overall,roundwood production for the year ended March 2006 wasdown 7 percent on 2004. Fluctuations in production reflectweaker profitability as a consequence of the strong NewZealand dollar and high labour, fuel, energy and shippingcosts. As a result, some large forest owners have reducedharvest levels to increase the maturity of their forests andimprove wood quality.” (MAF 2006).invest in the research and development required to increaselevels of mechanization. In general the components,including the raw materials, of heavy equipment aresourced from off-shore and in general traded in $US.The difficulty is that the NZ forestry sector is largely anexport oriented sector, although the past 3-4 years haveseen a very strong domestic economy, and alignment ofall factors to achieve positive growth in returns is almostimpossible to achieve.Figure 5Figure 4Source: Reserve Bank of New Zealand, June 2007A lower $NZ relative to the $US will generally leadto more positive return for local growers and thereforestimulate supply chain activity. Unfortunately thiscreates an inverse or dampening effect as shipping costsand the cost of imported equipment and machinery alsoincrease.Interest RatesWe can predict with some certainty that based on thesignificant increases in new planting rates from 1995 -2000 that there will be a requirement for similar resourcedeployment in 2020 - 2025. What we don’t know is whatthe other macro economic conditions will be that willdrive forest owner’s decisions to harvest early, late or notat all.We also know that unless there is better knowledge bycontractors on how to access strategic information aboutthe wood resource, infrastructural requirements and woodflows, the requirement for their services will be pronouncedto them as fait accompli and without the necessary forwardplanning and information sharing so necessary to enablerisk analysis and more secure investment decisions.Interest rates (Fig 6) have remained remarkably stablein New Zealand over the past 5-6 years which would tendto suggest a very good opportunity to secure funds to growinvestment activity. Unfortunately timing has again beenwrong and because of tight operational margins contractorshave tended to operate on day to day cash-flow and divertreserves from business activity away from the sector,particularly into property.Figure 63. Lack of Certainty With Financial DriversExchange Rate VolatilityExchange rates (Fig 5), in particular the $US/$NZ,have a significant impact on contractor confidence toSource: Reserve Bank of New Zealand, June 200710NZ JOURNAL OF FORESTRY, AUGUST 2007

feature4. Lack of Positive Environment for ForestEngineering ResearchDemise of Logging Research InstituteIn 1997 the Chief Executive of Forest Researchreported:“In February we launched our new identity, and it has metwith widespread approval and acceptance. It has already helpedto establish us as a more client-responsive and commerciallyfocusedprovider of valuable RS&T solutions to our increasinglycommercial client base.” (Heard 1998).This was a clear signal of a different approach toindustry research and what was to follow.The NZ Logging Industry Research Associationceased to operate as a research organisation in 1998 whenits sale to Forest Research (LIRO) was completed. Itsdemise was a direct result of the sector restructuring thathad been occurring since 1987 when its prime supporterand funder, the State (NZ Forest Service) went out ofexistence. Many of the new owners slowly started to questionthe value and benefits of such an organisation in a newbusiness environment that demanded stronger bottom lineperformance.Forest owners have gradually withdrawn support forindustry good research and this has impacted back onGovernment funded support i.e., Government researchmodels were supportive of investment in areas that weresupported by industry. This proved to be a problem formost plantation management research programs with theoutcome being a once world respected plantation forestresearch institute now focusing more on the generation ofrevenues from commercial clients rather than the traditionallong term and blue sky biased research that had been afeature of a less commercial model.Precisely the same outcome has been delivered forharvesting research.Without an appropriate organisation to promote,manage and encourage investment in harvesting researchcontractors are more reluctant to carry the full risk ofinvestment in mechanisation and this continues today.There have been recent initiatives to revive interest inharvesting productivity work and a recent article by FICA(Forest Industry Contractors Association) is of interest.“.....there has emerged a gap in knowledge between forestcontractors and the managers now employed by the new groupsof forest owning TIMOs.The extent of that knowledge gap is glaring when FICArepresentatives suggested the wider question be considered- how to improve the forest supply chain? By and large forestmanagers look to contractors to answer this question as thecompany knowledge of how harvesting is organised anddelivered has disappeared.The exceptions are the (generally) smaller, integratedforest owners/managers who understand the need to build andmaintain close relationships with their contractors.Ask them how to improve the supply chain and they won’ttalk of the productivity of harvesting - they will talk about aneed to rebuild trust and relationships. How can that happen?Its no secret that longer term contracts that reflect the risksassociated with large capital purchases of forestry-specificplant and equipment would go a long way to rebuilding trust.”(FICA 2006).Difficulty in Acquiring funds for Private ResearchCurrent New Zealand tax law allows tax deductionsfor research and development expenditure provided allsuch expenditure is recognised as an expense for financialreporting purposes. However this is only available forup to $10,000 in an income year. Also any research anddevelopment expenditure incurred in devising a patentedinvention is only deductible when the patent is sold. Forforestry contractors who tend to spend their own timeworking on new developments over a period of several yearsthis amounts to very little incentive.There are numerous buckets of public money availablefor individuals or organisations to apply for research grants.The common response however from participants who wishto pursue this avenue is that the necessary paperwork andassociated bureaucracy associated with application, reviewand audit is both complex and intimidating. While thisprocess can be channeled through a broker or consultantthe criticism is that it is easier to get the funding to pay thebroker or consultant than it is for the specific research.Lack of Certainty of Contract TenureMany contractors operate without a long term servicecontract. There are a number of factors that have contributedto this situation and reflect a constantly changing businessenvironment.In the early days of contractor participation in thesector there were very few contract terms of less than 5years. This provided security for contractors to investin equipment and plant and also provided lenders withsecurity to loan money over a sufficiently long timeframe.Another important feature of those early contracts was aninbuilt agreement to review contract rates that accounted forchanges in capital equipment pricing and regular changesin cost components that affected operating costs e.g., fuel,tyres, spare parts etc. This contract model recognised thevolatile and usually high inflation experienced at the timeand resulted in high levels of trust and common objectiveby forest owner and contractor.NZ JOURNAL OF FORESTRY, AUGUST 2007 11

featureThe model today is a little different and is a majorcontributor to contractor indifference about riskinginvestment in a harvesting business. While manycontractors have worked with the larger companies for longperiods of time their legal relationship is month to month.This means that if there is a downturn in sales contractorsare laid off. Many have responded to this by becoming largercontractors with several crews across a range of forest ownersor simply by sub-contracting. They effectively transfer therisk to others who are less business minded but happy tohave a go.It is also relevant to make the point here that theindustry is currently coming off a record high annual harvestof $22.5m m3 in 2003 and there has been excess capacity inthe system as the annual cut has retrenched over the past 3years. This excess has either been permanently removed asdisgruntled contractors have exited the industry or largercontractors have downsized and while still providing acontracting service might be reluctant to consider futureexpansion without greater contract security.5. Nature of the ResourceFrom a paper in 1997 by the NZ Logging IndustryResearch Organisation:“One major factor preventing the rapid integrationof mechanization into clear fell operations has been thetree characteristics of New Zealand’s plantation forests.Approximately 90% of New Zealand’s 1,239.000 hectaresof plantation forestry is planted in Pinus radiata. Finalstockings of between 250 to 350 stems per hectare are achievedas quickly as possible, usually by age 14 years, in order tomaximize individual tree volumes harvested at clear fell. Theconsequences of this early low stocking, and fast growth rates,have traditionally been heavily branched (>10 centimetrediameter) final crop trees with large stem volumes averaging2 to 5 cubic metres by 30 years of age”. (Kirk et al. 1997).The recent trends discussed earlier have meant thatthe nature of the tree has changed quite significantly.We are now dealing with a smaller tree, maybe 1.5 to 2.5cubic metres with a 4 - 6 metre pruned butt log, howeverthe upper logs still tend to be large branched and suitableonly for industrial grade logs and for pulpwood. This hasprovided opportunities for larger scale mechanisation andI believe these opportunities have been taken through thefurther development of the Waratah processors, harvestechdelimbers and some imported equipment more suited toour tree type.The other huge change has been the drift towardstracked excavator-based equipment due to the delimbing,access and environmental constraints imposed by the treetype and topography. Anecdotal evidence would suggestthat the bulk of delimbing and log making activity is nowperformed by specialized processing heads. The magnitudeof this uptake however over the past 3-5 years is unknownas our industry has no way of monitoring this. We can saywith some certainty that the traditional large branchedP radiata tree will remain with us for some time and thiscoupled with a raft of other factors will tend to cement inhigher levels of mechanisation over the next 5-10 years.6. Other FactorsSome of the other factors that have retarded theprogress of mechanisation through the 1970’s - 1990’s arenow beginning to have more or less impact as changes inthe wider environment filter through to our industry. ANew Zealand forest industries labour market analysis in2005 identified the main drivers of changes in employmentnumbers across the industry (APR Consultants 2005). Someof these included:i. Labour Market IssuesCompetition from other industries for skilled labourand for higher remuneration in traditional forestry areaswhere unemployment levels are now low has encouragedharvesting contractors to more actively investigatemechanisation. Sourcing skilled and motivated people fora sector that has a short sighted approach to work securityand lack of career pathways impacts on the confidencecontractors have in investing in long-term projects liketraining. The educational qualifications of employees inthe forestry sector are lower than the average industryqualifications with 33% of forestry and logging employeeshaving no qualifications c.f. 19.4% for all industries.ii.TechnologyRapid technology change is driving a change towardsincreasing mechanisation across the forest growing andprocessing sectors which means that employment generatedby forestry may be more modest than previously predictedbut this employment will require more technology literatestaff. There is however a training vacuum within the forestrysector for highly skilled and technically proficient operatorsand this is where the industry suffers for want of higherremuneration in recognition of the skills required. A formalmachine operator selection and training programme isdesperately required to lift our performance in this area.iii.Industry FactorsIndustry factors previously identified including harvestvolumes, planting volumes and industry reorganizationwhich tend to have the most profound impact on contractorsat the harvesting end of the value chain.iv.Wider Economic ChangesSector development and international trade initiativeshave tended to be fragmented in the past with numerous12NZ JOURNAL OF FORESTRY, AUGUST 2007

featureindustry organisations all operating in their own fieldwithout consideration of the impacts further up or downthe supply chain. Issues identified include the effect ofexporting more wood at lower costs, exchange rates, stateof the Asian economy, strength of the US market andGovernment polices.The APR report confirms some of the issues identifiedearlier in this paper and provides some confirmation thatthere has been a more rapid uptake of mechanization overthe past 3-5 years however the question does need to beasked whether this has been in spite of the environmentalconditions of the time or whether it has simply been forcedon contractors because of the business conditions they havehad to adapt to.The wider question is whether mechanization can be aplanned process or whether it is something that happens as aresult of other events or circumstances. To help in answeringthat question there are two other factors that have impactedseriously on the ability of the industry as a whole to makeprogress over the past 10 years or so.Poor Returns for Sector ParticipantsTo illustrate the serious nature of the trend to dwindlingreturns to the forest grower of the past 12 years the FormeStumpage Movement Index (Fig 7) has been incorporated.The index monitors costs for a range of typical harvestingoperations in different terrain and lead distance from thecustomer. It also calculates returns to the forest grower basedon actual market prices at the appropriate dates.Unfortunately the trend is very clear to see and unlessthere are significant upwards movements in returns togrowers the availability of funds to harvest the areasprojected over the next 10 years and provide an economicreturn are seriously threatened.Figure 7of plantation forest now being converted to residentialdevelopment, dairying or other more profitable use.Plantation forestry contractors are in turn beingsqueezed as return on capital invested, ability to secure longterm volume commitment, labour market constraints andother factors seriously undermine business success.Negative Public Perception of the Forest IndustryThe public perception of commercial plantationforestry has been tarred with the same brush as in othercountries. Persistent pressure from environmental NGO’s,trends to locking up forests as a response to climate change,carbon sequestration and a host of other trendy andoften scientifically bereft ideology has contributed to theindustry having a negative image in New Zealand. This hasunfortunately been reflected in restrictive and unbalancedGovernment policies that are articulated on a scale neverbefore seen in the sector.This has translated into the general public quickto climb on board popular bandwagons with the resultthat forestry as a career is no longer a viable option forschool leavers. This has seriously depleted the stocks ofwell educated, technically proficient and manually adeptpeople prepared to consider forestry as a technology drivenindustry that will remunerate people both from a financialand a job satisfaction viewpoint.Our population is now largely resident in urban areas,forestry is a rural activity, and their public interface withthe sector is with large logging trucks clogging the roadscausing accidents, belching diesel, causing damage to roads,speeding past schools and of more concern, employing antisocial,hard drinking and drug using employees. While wein the industry know the reality is different this is hardly animage a sector desperate to attract highly qualified, respectedand motivated people wants to present. Serious thoughtand action needs to be brought to bear if we are to seeforest harvesting and engineering capture the engineeringtechnology required to build on the somewhat staggeringperformance of recent years.ConclusionsThere is no question that levels of mechanisationuptake by forestry contractors over the past 20-40 yearshas been indelibly shaped by the environment the sectorhas operated in.Source: Forme Consulting Group Ltd In-House Databases September2006.Competing land use alternatives are already havingan impact on the forestry sector with significant tractsIn New Zealand the passage to mechanisation hasmost definitely been reactive rather than within a strategicplanning framework determined by an assessment ofexisting and predicted environmental factors and aconsidered response to how we deal with those factors.If we were to perhaps try and summarise the factorsNZ JOURNAL OF FORESTRY, AUGUST 2007 13

featureidentified in this paper into three super categories andattempt to classify each as a positive or negative influence onthe ability or desire of contractors to pursue mechanisationour answers may not be flattering. They would include:EconomicThe economic factors of the past 10 years have mostdefinitely been negative. This is clearly illustrated in Fig7 where the trend lines representing returns to forestowners are still heading south. This directly affects theability of forest growers to invest in their service providers(contractors) businesses via industry good research anddevelopment and to pay fair rates that will in turn enablecontractors to undertake similar investment in productivityinitiatives in their businesses.SocialThe environment for creating and maintainingan attractive employment option for highly skilledand motivated people has deteriorated significantly.Environmental ideology lacking in scientific scrutiny andnegative perception of the sector as a resource consumingrather than a resource creation industry has resulted insevere pressure being placed on the industry’s ability torecruit, retain and remunerate good quality personnel.StrategicSimilar presentations covering South Africa and Europeanexperiences were also included in the conference program.Further information is available if interested.ReferencesAPR Consultants. July 2005: Industry Overview andPrevious Research Review - New Zealand ForestIndustries Labour Market Analysis 2005.Cochrane, Dave. June 1991: Development of New ZealandMechanised Logging Equipment, Address to LoggingIndustry Research Association Seminar, MachineryDevelopments in Logging.FICA. September 2006: Forestry industry groups work tocreate new research body, NZ Logger Magazine.Heard, Bryce. 1998: Directions December 1998, Issue No22.Hagler, R. 2006: Why Pension Funds invest in Forests,paper presented to NZIF Conference, WellingtonNZ.Kirk, P.M.; Beyers, J.S.; Parker, R.J.; and Sullman, M.J.1997: Mechanisation Developments within the NewZealand Forest Industry: The Human Factors.Ministry of Agriculture and Forestry. 2006: Situation andOutlook for New Zealand Agriculture and Forestry- July 2006, Update - ForestryMinistry of Forestry. April 1993: National Exotic ForestDescription 1992 National and Regional Wood SupplyForecasts.The forestry sector needs to work together towards awell researched and communicated strategy for improvingthe overall performance of the stump to customer woodsupply chain. Better integration of felling, extractionand transportation activities, now almost the exclusivedomain of third party contractors is urgently required. Itis inevitable that the pressures created by the deterioratinglabour market conditions will demand more of technologyto compensate in what will be a capital deepening trend.The pathway to mechanisation will always be intransition. The New Zealand experience has beenhaphazard and frustrating and while the barriers haveoften seemed insurmountable, there has nonetheless beenprogress. We will never know where we could have beenhad the appropriate structures for consistent research anddevelopment been in place but we do know that had theybeen in place we would be sitting much further to the rightof the mechanisation continuum.AcknowledgementsDr. Michal Brink, Forestry Solutions (Pty) Ltd,Pretoria South Africa, in conjunction with NelsonMandela Metropolitan University was the catalyst for thepreparation of this paper presented at the “Focus on ForestEngineering” conference in Nelspruit, South Africa inNovember 2006.14NZ JOURNAL OF FORESTRY, AUGUST 2007